Still All About The Big Stimulus

Investor’s first read – Daily edge before the open
DJIA: 20,662
S&P 500: 2,357
Nasdaq  Comp.:5,878
Russell 2000:1,364
Friday, April  7, 2017    9:09 a.m.
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      The U.S. Missile strike on an airfield in Syria in response to Syrian President al-Asaad’s sarin gassing of civilians in Syria is Front Page news today. 
      So far, the Street is wary, but not panicky.
      Along with dozens of other scenarios, the military opted for this strike, taking care to exclude civilians and Russians from the casualties.
      What happens next is more important.
     
As I expected, the Street still has enough hope for a massive stimulus to step in and warily buy in face of Wednesday’s Fed announcement about its bond portfolio, as well as other looming negatives – Syria, North Korea, and potentially the biggest political scandal in our nation’s history.
      The Fed plans to begin unwinding its $4.5 trillion bond portfolio amassed over eight years of Quantitative Easing to support the economy which was rising out of the worst recession (Dec.2007 – June 2009) since the 1930s. It didn’t help that some members said they felt the stock market. Its portfolio consists of treasuries and mortgage-backed securities. To date, it has been reinvesting the proceeds from the bonds and rolling them over rather than reducing its balance sheet. That will end.

TODAY
      The market has stabilized before the open with the Street confident, there will be few consequences for yesterday’s U.S. missile strike on Syria. If the market stalls with little downside in early trading, the market stands to rally robustly going into the weekend.
        It’s still all about the stimulus….. so far.
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SUPPORT “today”: DJIA:20,576;S&P :2,349; Nasdaq Comp.:5,849
RESISTANCE: “today”: DJIA:20,773;S&P500:2,378;NASDAQ Comp.:5,903

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POLITICAL/STOCK MARKET
       Why a Trump Syria Policy Change Now ?
Is This About His 35%Approval Rating ?

        Of course, Trump has continually demonstrated defending his image trumps everything.
       Yesterday’s Syrian airfield strike with 59 Tomahawk missiles launched from two Destroyers in the Mediterranean Sea was in retaliation for Asaad’s use of Sarin gas on April 4 that killed more than 70 civilians.
      For Trump, this is an about face on intervention in the Mid-East, and the only reason I can see is he expects it to boost his approval ratings….and it will, by 5 – 7 points –clever. 
      In 2013 he urged President Obama not to retaliate against Asaad for his use of nerve agent sarin in 2013 tweeting “Again to our very foolish leader do not attack Syria –If you do many bad things will happen & from that fight the U.S.gets nothing.”  – “The only reason President Obama wants to attack Syria is to save face over his very dumb RED LINE statement. DO NOT attack Syria.” (Sept. 5, 2017).
      I Have continually warned against Trump putting the U.S. on a war footing to boost patriotic support and his approval rating. I expected it to be North Korea.  The Syrian gassing provided a perfect opportunity.
      With his approval rating at record lows for any president in his first 100 days, Trump is desperate to do something. Privately, he is thankful for this opportunity.

        By the way, how come Trump is so outraged about children being gassed in Syria. Was he equally outraged about the murder of the 20  six-year olds in Sandy Hook, Connecticut in 2012 ?

        Well, reportedly, Trump and Michael Flynn have been enthusiasts of Alex Jones’ “Infowars,” a web-based radio and video network that has promoted the theory that Sandy Hook was staged by Democrats to champion a gun control agenda. After he won in November, Trump called to thank Jones for his support.

          Maybe America is the sick one. NRA membership exploded after Sandy Hook.  These were six-year olds, gunned down at point blank range by the son of an NRA gun lover. SICK, SICK, SICK, SICK, SICK !

HOUSE INTELLIGENCE COMMITTEE
            Chairman of the House Intelligence Committee, Devin Nunes will temporarily cede control of  the investigation of pre-election collusion between Russia and the trump team to Mike Conway of Texas, citing charges by “several left-wing activists” that he made unauthorized disclosures of classified information relative to the investigation.
      Don’t expect this to go very far, Nunes is being investigated by the House Ethics Committee.
      The Republicans regained total control of the Supreme Court yesterday, overriding the Democrat’s filibuster with the so-called nuclear option. Republicans voted to overturn the 60-vote requirement for Supreme Court nominees and the Senate followed with a 55-45 procedural vote to enable today’s final confirmation of Neil Gorsuch.  With this act, the Republicans drive a wedge in any hope for an unbiased court.  The Republicans win – our Republic loses.

     What now, an extension of the Republican rape and pillage of all gains for humanity achieved over the years via our legal system ?  Afraid so.
TRUMP SQUIRMS BUT A WAR FOOTING MAY BAIL HIM OUT
      The more Trump squirms to find a way to divert attention from the main issue demanding resolution, the guiltier he looks.
      The current diversion is Susan Rice who Trump accused of being politically motivated when certain Trump associate were included in a sweep of foreign officials last year by U.S. intelligence agencies. Their identities are usually not revealed, but may be if national security is an issue. To everyone’s surprise, Trump claims in a tweet that Rice committed a crime when certain individuals were “unmasked”. Rice was National Security Advisor to President Obama from 2013 to 2017.

WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !
       THE STAGE IS BEING SET NOW !
       
Expect the Trump administration to put the United States on a war footing within one year, probably regarding North Korea.  For one, it would justify its big military spend. For another, it would facilitate a mid-term election victory, since voters are reluctant to change  Congress significantly when the nation is gearing up for war.. It worked for George Bush in 2003.  Finally, it would deflect attention away from the Trump/Russia issue, that could sink the administration.
ALL OF THE ABOVE HAS THE POTENTIAL TO ADVERSELY IMPACT THE STOCK MARKET  AND   MERITS CONSIDERATION.
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CORPORATE EARNINGS (updated  March 31, 2017)
Factset
      Q1 earnings are projected to increase 9.1%. That compares with a Q! est. on Dec. 31 of +12.5%.  2017 as a whole are projected at a plus 9.8% down from Dec. 31 estimates of 11.6%.  Currently, the P/E on trailing 12-month earnings is 19.8 x, and based on earnings 12 months out is 17.6 x. That compares with a 10-year average P/E of 13.9. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 3/29/17 and )
      On occasion, I technically analyze each of the 30 DJIA stocks  for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
      As of  March 29, 2017,  a reasonable risk is 20,413 a more extreme risk is 20,196.Near-term upside potential is 21,113
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ODDS FAVOR
1-Trump’s presidency will implode within three years, Bannon will be gone, along with Breitbart News and Alt-Right’ influence.
2-Trump will put the United States on a war footing with North Korea in coming months with or without China’s cooperation.
3-Expect major domestic violence this summer as alt-Right groups confront protestors against tax reform and Congress’ gutting of a host of popular government programs.
4-Seeds of a recession will be planted as Congress guts programs needed and used by millions.  Stock market has its final run.
5-Social Security and Medicare will be targeted for drastic changes if the Republicans hold control of both houses in 2018 and Congress is successful in gutting most of social service programs and the EPA per Trump’s wish list.     
WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !
       THE STAGE IS BEING SET NOW !
       
Expect the Trump administration to put the United States on a war footing within one year, probably regarding North Korea.  For one, it would justify its big military spend. For another, it would facilitate a mid-term election victory, since voters are reluctant to change  Congress significantly when the nation is gearing up for war.. It worked for George Bush in 2003.  Finally, it would deflect attention away from the Trump/Russia issue, that could sink the administration.
ALL OF THE ABOVE HAS THE POTENTIAL TO ADVERSELY IMPACT THE STOCK MARKET  AND   MERITS CONSIDERATION.
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Source of weekly economic calendar and good recap of  indicators: mam.econoday.com.
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

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